Jack MacDonald of Charles Towne Holdings


“Private equity is investing substantial amounts in industry and there are large financial gains for rolling up firms.”

Each month, Charles Town Holdings profiles a member of our investment banking team. This month we get to know Jack MacDonald.

Jack leads the Asset and Wealth-Management Sector for Charles Towne Holdings. Jack has more than 30 years experience serving the needs of growing asset management firms. His expertise crosses many sectors, including institutional asset management, mutual funds, wealth management and alternative asset management. Previously, he was a MD at Raymond James, Inc. Prior industry experience includes seven years as the principal and co-founder of Xpl Advisors LLC. He spent five years with Putnam Lovell Securities Inc., first as MD and co-founder of fixed-income capital markets, and subsequently as MD, asset management mergers and Acquisitions. Earlier he served as a senior banker in the financial institutions group for Citicorp Securities, Inc, and Director of Corporate Finance at PepsiCo, Inc. He began his career as a CPA. Mr. McDonald holds a Master Of Management from Kellogg Graduate School of Management at Northwestern University with a BBA and a focus in accounting from Saint Norbert College. 

You were one of the early bankers to focus on Asset Management. Share your background with firms you worked for. 

I spent 10 years with Baxter International and PepsiCo in corporate finance roles. In 1989 I moved to Citibank to oversee the Asset And Wealth-Management space. The first deal I proposed was turned down by management because it was not “not a real industry”. Eventually, we became one of the very early banks to cover the industry. We financed some of the early LBOs in both the loan and high-yield markets. Later we combined our credit experience in the sector with Citibank’s structured finance skills to create the industry’s first structured finance solution. I later lifted-out a team and joined Putnam Lovell and created a structured finance group. This group was the forerunner to the firms that now buy revenue shares in the asset and wealth-management space. I left Putnam Lovell with a colleague to start our own firm called XPL Advisors where our first transaction was one of the earlier alternative investment manager deals. I later joined Raymond James to add asset and wealth-management coverage to their financial institutions group. While there, we co-lead one of the early IPOs of a large wealth management company.

M&A activity really picked up in the last quarter of 2020. What are your expectations for 2021?

2021 is off to a very strong start and we see M&A activity in asset and wealth-management continuing at a record pace. For buyers, conditions are favorable as capital is very plentiful and interest rates are at historical lows. The 10-year bull market has been very favorable for the sector. Private equity is investing substantial amounts in industry and there are large financial gains for rolling up firms. There are over 5,000  RIAs in the US with many of their founders nearing retirement age and, thus,  in need of a succession plan. In addition, small and mid-sized firms can no longer afford to be at the forefront of investment and technology solutions. Potential changes in capital gains tax rates may also motivate transaction activity. 

What can RIA firms expect to sell for in the current market?

Despite the covid-19, valuations are at all-time highs and I don’t see that changing in the near-term valuations in the sector are driven by a number of factors, including size and scalability, growth rates, client demographics, operating margins and quality of the team. At the low end of the range, firms might sell at 5X to 8X EBITDA.  firms with assets under management over 1 billion may be valued in the 9X to 12X EBITDA, or more. Goldman was said to have paid 16X  for United Capital. 

You currently have a few buy-side mandates. What are the ideal targets for your clients? 

Generally, these two buyers are looking for wealth managers in an AUM range of $500 million to $3 billion, or more. Both are focused on specific geographic locations — one in the South and the other in the North Central region of the country. We also see strong demand for wealth managers with AUM $250 million, or more.

Tell us three things that most people don’t know about Jack McDonald. 

  1. I was a user of investment banking services the first 10 years of my career. 
  2. I completed my first half marathon in 2019.
  3. When I was 8 years old, I met Vince Lombardi, Bart Starr and Jim Taylor — There could be no bigger thrill for a small town Wisconsin boy! Like many Wisconsin natives, I own several shares in the Green Bay Packers.